The price of gas at the pump is expected to go up by about 25 cents a gallon under Washington Initiative 732, among other increases in energy costs. The trade-off would be a decline in the state sales tax rate and other taxes. Elise AmendolaAP photo

The price of gas at the pump is expected to go up by about 25 cents a gallon under Washington Initiative 732, among other increases in energy costs. The trade-off would be a decline in the state sales tax rate and other taxes. Elise AmendolaAP photo

No on I-732; carbon tax rough draft needs work

Here’s an unhappy prediction: Dirty air around the Puget Sound, and the attendant threat of irreversible climate change, won’t go away as long as the solutions are largely punitive. Cat-and-mouse games between government regulators and industry lawyers will play on interminably while temperatures rise, oceans acidify and forests burn.

Example No. 1 is President Obama’s plan to slash carbon dioxide emissions from coal-fired power plants by 2030. It’s going nowhere fast after being tied up in federal court this year by coal-state governors and energy firms.

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This is what the authors of state Initiative 732 set out to do. With their vision for the U.S.’s first revenue-neutral carbon tax, they have prescribed disincentives for fouling the air on the front end while putting money in the pockets of manufacturers and other impacted parties on the back end.

Credit them for coming close, but we can’t support I-732 for fear of an unintended hit to the state budget.

The punitive side of the initiative looks like this: a tax on fossil fuel combustion equal to $15 per metric ton of carbon dioxide the first year, $25 the second year, and rising gradually thereafter.

The burden wouldn’t be borne solely by smokestack polluters. The price of a gallon of gas at the pump would increase by roughly 25 cents. The cost of household electricity is also projected to rise 5.4 percent — a fraction of the 20-percent jump erroneously claimed by the initiative’s foes.

The positive side of the deal? The state would enact a 1-percentage-point drop in the sales tax rate, lower business taxes on manufacturers, and give an enhanced tax exemption to low-income working families.

Economists could blow your mind explaining how I-732 harnesses the power of Pigouvian tax theory and the double-dividend hypothesis. But at its most basic, the measure posits a creative way for Washingtonians to act on the moral imperative to halt global warming. Our neighbors in British Columbia adopted a similar system in 2008, and results so far look promising.

Unfortunately, the main selling point of I-732 — that it would be revenue neutral — doesn’t seem to pencil out. A fiscal impact study by state economists estimates the initiative would suck $800 million from the state general fund over the next six years.

Carbon Washington, the group behind the I-732 campaign, says the study is wrong. But we say Washington can’t afford to gamble when public school funding and other big-ticket obligations are coming due in 2017.

There’s no question Carbon Washington is a tenacious bunch. From the outset, it was squeezed by opposition on two flanks: from business groups that cringe at any new tax, and from progressives and labor interests that pushed for a different carbon tax model, one whose revenues would be invested in clean-energy infrastructure.

Because of these counterforces, the ink on I-732 was barely dry when it went out for signature gathering last year. Consequently, it has glitches —such as an overgenerous tax break for Boeing — that its authors concede could require retroactive fixes by the Legislature.

And still the initiative’s mastermind, economist Yoram Bauman, presses on. “The perfect shouldn’t be the enemy of the good,” Bauman told our editorial board, in what hardly sounds like a resounding message for a pro-732 bumper sticker.

We agree that a market-based tax-swap scheme could ultimately make a feasible blueprint for curtailing greenhouse gases. But is it wise to turn in a rough draft and trust legislators will correct it well enough for a passing score?

Environmentally conscientious voters shouldn’t feel guilty for grading this proposal incomplete. A “no’ on I-732 could very well mean “we hope to see a better, less risky version next year.”